EXHIBIT 10.20
EXECUTION COPY
IDENIX PHARMACEUTICALS, INC.
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
JULY 27, 2004
TABLE OF CONTENTS
PAGE
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SECTION 1 DEFINITIONS...................................................... 1
1.1 Definitions................................................ 1
SECTION 2 REGISTRATION RIGHTS.............................................. 7
2.1 Requested Registration..................................... 7
2.2 Company Registration....................................... 10
2.3 Expenses of Registration................................... 11
2.4 Registration Procedures.................................... 11
2.5 Registration on Form S-3................................... 13
2.6 Indemnification............................................ 14
2.7 Information by the Participating Holders................... 17
2.8 Rule 144 Reporting......................................... 17
2.9 Transfer of Registration Rights............................ 17
2.10 General.................................................... 18
2.11 Other Registration Rights.................................. 18
2.12 Mergers, Etc............................................... 18
2.13 Termination................................................ 18
SECTION 3 COVENANTS OF THE COMPANY AND THE PURCHASERS...................... 18
3.1 Company Covenants.......................................... 18
3.2 Purchaser Covenants........................................ 19
3.3 Novartis' Approval Rights.................................. 20
3.4 Standstill................................................. 22
SECTION 4 STOCK SUBSCRIPTION RIGHTS........................................ 23
4.1 Right to Purchase.......................................... 23
4.2 Price...................................................... 24
4.3 Closing.................................................... 24
4.4 Securities Issued as Equity Incentives..................... 24
4.5 Novartis's Special Subscription Rights. (a)................ 24
SECTION 5 MISCELLANEOUS.................................................... 25
5.1 Survival................................................... 25
5.2 Amendments and Waivers..................................... 25
5.3 Successors and Assigns..................................... 26
5.4 Entire Agreement........................................... 26
5.5 Notices.................................................... 26
5.6 Severability............................................... 27
5.7 Counterparts............................................... 28
5.8 Titles and Subtitles....................................... 28
5.9 Nouns and Pronouns......................................... 28
5.10 Remedies................................................... 28
5.11 Expenses................................................... 28
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5.12 Delays or Omissions........................................ 28
5.13 Amendment and Termination of Certain Provisions of the
Prior Purchase Agreement................................... 29
5.14 Governing Law and Consent to Jurisdiction.................. 29
5.15 Further Assurances......................................... 29
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IDENIX PHARMACEUTICALS, INC.
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this "AGREEMENT")
is entered into as of July 27, 2004, by and among IDENIX PHARMACEUTICALS, INC.,
a Delaware corporation (the "COMPANY") and the parties set forth on Exhibit A
attached hereto.
RECITALS
WHEREAS, the Company, Novartis and certain of the Company's
stockholders entered into a Stockholders' Agreement, dated as of May 8, 2003
(the "Stockholders' Agreement"), for the purpose of, among other things, to make
provision for the grant of registration rights with respect to shares of the
Company's Common Stock and other matters relating to the governance of the
Company; and;
WHEREAS, the parties hereto wish to amend and restate in its
entirety the Stockholders' Agreement as more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereby amend and restate the Stockholders'
Agreement to read in its entirety as follows:
SECTION 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"1998 EQUITY INCENTIVE PLAN" shall mean the Idenix Pharmaceuticals,
Inc. 1998 Equity Incentive Plan, as amended from time to time.
"ACQUISITION PROPOSAL" shall mean a bona fide tender, exchange or
other offer or proposal by any Person, entity or group (an "OFFEROR") the
consummation of which would result in a Change in Control of the Company.
"ACQUISITION TRANSACTION" shall have the meaning set forth in this
Section 1.1 under "FULLY DILUTED COMMON STOCK DEEMED OUTSTANDING."
"AFFILIATE" shall mean, with respect to any specified Person, any
other Person that directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"AGREEMENT" shall have the meaning set forth in the first paragraph
of this Agreement.
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"ANCILLARY AGREEMENTS" shall have the meaning given such term in the
Purchase Agreement.
"BOARD" shall mean the Company's Board of Directors.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York or the Commonwealth of
Massachusetts are authorized or required by law or executive order to close.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting or non voting) of such Person's capital stock
(including, without limitation, common stock or preferred stock) and any and all
securities, rights, warrants or options exercisable or exchangeable for or
convertible into such capital stock (including, without limitation, any rights,
restricted stock awards or other stock-based awards issued pursuant to the
Company's 2004 Stock Incentive Plan or any other stock compensation or equity
incentive plan of the Company).
"CHANGE IN CONTROL OF THE COMPANY" shall mean (a) a merger,
consolidation or other business combination or transaction to which the Company
is a party if the stockholders immediately prior to the effective date of such
merger, consolidation or other business combination or transaction, as a result
of such stock ownership and following such merger, consolidation or other
business combination or transaction, own less than 50% of the securities of the
surviving entity or the parent of the acquiring company entitled to vote in the
election of directors (other than in connection with the transactions
contemplated by the Purchase Agreement and the Ancillary Agreements), (b) an
acquisition by any Person (other than the Purchasers and/or their respective
Affiliates or underwriter or group of underwriters in connection with a firm
commitment public offering by the Company) of direct or indirect beneficial
ownership of 50% or more of the Voting Stock, (c) a sale of all or substantially
all the assets of the Company (other than to the Purchasers and/or their
respective Affiliates), (d) a liquidation or dissolution of the Company or (e)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board (together with any new directors whose
election by such Board or whose nomination for election by the stockholders was
approved by a vote of a majority of the directors of the Company then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved by the directors
then in office at the beginning of such period other than a director designated
by a Person who has entered into an agreement with the Company to effect a
transaction described in the preceding clauses) ceasing for any reason to
constitute a majority of the Board then in office (other than in connection with
the transactions contemplated by the Purchase Agreement and the Ancillary
Agreements).
"COMMISSION" shall mean the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"COMMON STOCK" means the Common Stock, $.001 par value per share, of
the Company and includes any capital stock that the Common Stock may hereafter
be recapitalized, reconstituted, substituted or otherwise exchanged for, whether
by business combination, operation of law or otherwise.
"COMPANY" shall have the meaning set forth in the first paragraph of
this Agreement and includes any successor (by merger or otherwise) thereto.
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"COMPANY REGISTRATION CUTBACK" shall have the meaning set forth in
Section 2.2(b).
"CONTINGENT PAYMENTS" shall mean the payments contemplated under
Sections 1.2(b) and 1.2(c) of the Purchase Agreement.
"CONVERTIBLE SECURITIES" shall mean securities that are exercisable
for, convertible into or exchangeable for Common Stock. The term includes
outstanding options, warrants or other rights (a) to subscribe for or acquire
Common Stock or (b) to subscribe for or acquire other securities that are
convertible into or exchangeable for Common Stock, in each case, whether at the
time of issuance or upon the passage of time or the occurrence of some future
event.
"DEMAND REGISTRATION CUTBACK" shall have the meaning set forth in
Section 2.1(b).
"DLCA" shall mean the Development, License and Commercialization
Agreement, dated as of May 8, 2003, by and among the Company, Idenix (Cayman)
Limited and Novartis.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Exchange Act shall include a reference
to the comparable section, if any, of any such successor federal statute.
"FAMILY MEMBER" shall mean, as to any Person, such Person's spouse,
child (including a stepchild or an adopted child) or grandchild, or a trust for
the exclusive benefit of such Person or of any one or more of such relatives, or
a corporation controlled at all times by such Person and beneficially owned by
such Person or any one or more of such relatives.
"FORM S-1" shall have the meaning set forth in Section 2.1(a).
"FORM S-3" shall have the meaning set forth in Section 2.5(a).
"FORTY-FIVE DAY PERIOD" shall have the meaning set forth in Section
4.1(b).
"FULLY DILUTED COMMON STOCK DEEMED OUTSTANDING" shall mean, at any
given time, the number of shares of Common Stock outstanding at such time
(whether vested or unvested), assuming conversion of all Convertible Securities
including, without limitation, all outstanding options (whether vested or
unvested), warrants and restricted stock awards. Notwithstanding anything to the
contrary contained herein or therein, in determining the percentage ownership of
the equity securities of the Company owned by Novartis and its Affiliates for
all purposes under this Agreement and the DLCA, Common Stock issued after May 8,
2003 (i) upon exercise of options or upon grants of restricted stock awards or
other stock-based awards, in each case issued or granted after May 8, 2003
pursuant to compensation and equity incentive plans (other than shares of Common
Stock issued pursuant to options, restricted stock awards or other stock-based
awards granted after May 8, 2003 under the 1998 Equity Incentive Plan) or (ii)
in connection with the acquisition by the Company of all of the Capital Stock or
all or substantially all of the assets of another Person (an "ACQUISITION
TRANSACTION"), shall not be included in determining the Fully Diluted Common
Stock Deemed Outstanding of the Company.
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"GOVERNMENTAL AUTHORITY" shall mean the government of any nation,
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section
2.6(c).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section
2.6(c).
"INDEPENDENT DIRECTOR" shall have the meaning ascribed to such term
in the marketplace rules of the NASDAQ National Market as of the date of this
Agreement.
"INITIAL SELLERS" shall mean the Persons designated as "Initial
Sellers" in the Purchase Agreement, other than Jean-Pierre Sommadossi.
"INITIATING PREFERENCE HOLDERS" shall have the meaning set forth in
Section 2.1(a).
"INITIATING PURCHASERS" shall have the meaning set forth in Section
2.1(a).
"IN-LICENSE SHARES" shall have the meaning set forth in Section
3.2(b).
"IPO" shall mean a firm commitment, underwritten initial public
offering of equity securities of the Company.
"NEW SHARES" shall mean (a) any Capital Stock, including, without
limitation, Convertible Securities, of the Company and (b) adjustments to
conversion prices applicable to outstanding Convertible Securities; provided,
that any Convertible Securities issued to any director, officer or employee of,
or consultant to, the Company pursuant to any compensation or equity incentive
plan shall not be deemed to be "New Shares" until such time as such Convertible
Security is exercised and the equity security into which it is exercisable has
been issued; provided, further, that New Shares shall not include (i) any
securities issued in connection with any stock split, reverse stock split, stock
dividend or recapitalization of the Company which affects all holders of Common
Stock proportionally, (ii) 1,976,588 shares of Common Stock issued upon the
exercise of granted options (whether vested or unvested) outstanding as of May
8, 2003, (iii) any securities issued in connection with an Acquisition
Transaction, (iv) In-License Shares, (v) Common Stock issuable upon the
conversion or exchange of any Convertible Securities (but only to the extent the
issuance of such Convertible Securities were treated as New Shares hereunder),
(vi) any shares issued upon exercise of the Series C Warrants and (vii) up to
1,399,106 shares of Common Stock issued upon the exercise of options and other
awards reserved for future grants as of May 8, 2003 pursuant to the 1998 Equity
Incentive Plan. For the avoidance of doubt, "New Shares" shall include any
shares of Common Stock issued upon exercise of any options or grant of
restricted stock or other stock-based awards, in each case, granted after May 8,
2003 pursuant to the 1998 Equity Incentive Plan in excess of 1,399,106, whether
such options, restricted stock or other stock-based awards were available for
grant as a result of the expiration or termination prior to exercise of awards
outstanding as of May 8, 2003 or the repurchase of any restricted stock awards
outstanding as of May 8, 2003 or otherwise.
"NOTICE OF PROPOSED ISSUANCE" shall have the meaning set forth in
Section 4.1(a).
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"NOVARTIS" shall mean Novartis Pharma AG.
"NOVARTIS BIOVENTURES" shall mean Novartis BioVentures Ltd.
"NOVARTIS DIRECTOR" shall have the meaning set forth in Section 3.1.
"NOVARTIS PERCENTAGE" shall have the meaning set forth in Section
4.4.
"OFFERED NEW SHARES" shall have the meaning set forth in Section
4.1(a).
"OFFEROR" shall have the meaning set forth in this Section 1.1 under
"ACQUISITION PROPOSAL."
"PARTICIPATING HOLDERS" shall mean the Purchasers and the Preference
Holders seeking to include Registrable Securities in a registration filed by the
Company pursuant to this Agreement.
"PERSON" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.
"PREFERENCE HOLDERS" shall mean those Persons designated as such on
Exhibit B attached hereto under the heading "Preference Holders" and any of
their assignees or transferees to the extent they have succeeded to the
transferor's or assignor's rights hereunder and/or to the extent that they are
required to be bound by the terms and provisions hereof.
"PRIOR PURCHASE AGREEMENT" shall mean that certain Securities
Purchase Agreement, dated as of April 24, 2001, by and between the Company and
certain Preference Holders.
"PRO RATA NEW SHARES" shall have the meaning set forth in Section
4.1(b).
"PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated
as of March 21, 2003, by and among the Company, Novartis and the Company
stockholders named therein.
"PURCHASERS" shall mean Novartis and its Affiliates (other than the
Company and its Subsidiaries) and any of their respective assignees or
transferees to the extent they have succeeded to the assignor's or transferor's
rights hereunder and/or to the extent that they are required to be bound by the
terms and provisions hereof, and the term "PURCHASER" shall mean any such
Persons individually.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration in the United States effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration statement.
"REGISTRABLE SECURITIES" shall mean (a) any shares of Common Stock
now or hereafter owned by the Purchasers, however acquired, or acquired by any
Purchaser pursuant to the terms and conditions of this Agreement from the
Company or another Stockholder, (b) any shares of Common Stock now or hereafter
owned by the Preference Holders, (c) any Common
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Stock issued or issuable in respect of the shares contemplated by clauses (a)
and (b) above upon any share split, share dividend, recapitalization, split-up,
subdivision or other similar event, and (d) Common Stock issued or issuable in
replacement or exchange of any of the securities listed in clauses (a), (b) or
(c) above; provided, however, that shares of Common Stock that are Registrable
Securities shall cease to be Registrable Securities (i) upon any sale pursuant
to an effective registration statement or Rule 144 under the Securities Act, or
(ii) upon any Transfer or assignment which does not comply with the requirements
of Section 2.9 of this Agreement. Notwithstanding the foregoing, with respect to
the following individuals, only such number of shares of Common Stock set forth
next to their name shall be considered "Registrable Securities" hereunder:
Jean-Pierre Sommadossi (100,000 shares), Raymond F. Schinazi (100,000 shares),
Bruno Lucidi (100,000 shares), David Carder (50,000 shares) and Robert Murphy
(25,000 shares).
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 2.1, 2.2 and 2.5 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, reasonable fees
and disbursements of one counsel for the Purchasers and of one counsel for the
Preference Holders, as applicable, blue sky fees and expenses, and the expense
of any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company which shall be
paid in any event by the Company), but not including Selling Expenses.
"REQUEST FOR REGISTRATION" shall have the meaning set forth in
Section 2.1(a).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such successor federal statute.
"SELLERS" shall have the meaning set forth in the Recitals.
"SELLING EXPENSES" shall mean all underwriting fees, discounts,
selling commissions and stock transfer taxes applicable to the Registrable
Securities registered by the Participating Holders, as applicable.
"SERIES C WARRANT" shall mean a warrant to purchase Common Stock
issued to Preference Holders pursuant to the Prior Purchase Agreement.
"STOCKHOLDER" shall mean the Purchasers and the Preference Holders
and such Person's assignees or transferees to the extent they have succeeded to
the transferor's or assignor's rights hereunder and/or to the extent that they
are required to be bound by the terms and provisions hereof.
"SUBSIDIARIES" (or, individually, a "SUBSIDIARY") shall mean any and
all corporations, partnerships, joint ventures, associations and other entities
controlled by the Company directly or indirectly through one or more
intermediaries.
"SUPPLY AGREEMENT" shall have the meaning given such term in the
Purchase Agreement.
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"STOCKHOLDERS' AGREEMENT" shall have the meaning given to such term
in the recitals of this Agreement.
"TRANSFER" shall mean, with respect to any security of the Company,
any transfer, sale, gift, exchange, assignment, pledge, hypothecation,
encumbrance or other disposition to any other Person.
"UNSOLD NEW SHARES" shall have the meaning set forth in Section
4.1(c).
"VOTING STOCK" shall mean securities of the Company entitled to vote
in the election of members of the Board. Notwithstanding anything to the
contrary contained herein or therein, in determining the percentage ownership of
the equity securities of the Company owned by Novartis and its Affiliates for
all purposes under this Agreement and the DLCA, Common Stock issued after May 8,
2003 (i) upon exercise of options or upon grants of restricted stock awards or
other stock-based awards, in each case issued or granted after May 8, 2003
pursuant to compensation and equity incentive plans (other than shares of Common
Stock issued pursuant to options, restricted stock awards or other stock-based
awards granted after May 8, 2003 under the 1998 Equity Incentive Plan) or (ii)
in connection with an Acquisition Transaction, shall not be included in
determining the total number of shares of Voting Stock outstanding.
"$" shall mean United States dollars.
SECTION 2
REGISTRATION RIGHTS
2.1 Requested Registration.
(a) Registration Upon Demand. If the Company shall
receive from (i) holders of a majority of the Registrable Securities held by the
Purchasers (the "INITIATING PURCHASERS") or (ii) holders of a majority of the
Registrable Securities held by the Preference Holders (the "INITIATING
PREFERENCE HOLDERS") a written request (a "REQUEST FOR REGISTRATION") that the
Company effect a registration under the Securities Act of Registrable Securities
held by the Purchasers, in the case of a request by the Initiating Purchasers,
or held by the Preference Holders, in the case of a request by the Initiating
Preference Holders, the Company shall:
(i) Promptly, and in any event within 15 days, give written notice of
the proposed registration to all holders of Registrable Securities
(other than the Initiating Purchasers or the Initiating Preference
Holders in the case of a Request For Registration from such
Persons); and
(ii) Use its reasonable best efforts to effect such registration of the
Registrable Securities (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any
Participating Holder joining in such request as are
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specified in a written request received by the Company within 15
days after receipt of the notice specified in Section 2.1(a)(i);
provided, however, that the Company shall not be obligated to take any
action in respect of a Request For Registration to effect any such
registration pursuant to the provisions of this Section 2.1(a):
(A) If with respect to a Request For Registration by the
Initiating Purchasers, the Company has already effected three
such Requests for Registration on behalf of Initiating
Purchasers on the Commission's Form S-1 (or any successor form
to Form S-1) (a "FORM S-1") pursuant to the provisions of this
Section 2.1(a), and such registrations have been declared or
ordered effective and the securities offered pursuant to such
registrations have been sold;
(B) If with respect to a Request For Registration by the
Preference Holders, the Company has already effected three
such Requests For Registration on behalf of Initiating
Preference Holders on a Form S-1 pursuant to the provisions of
this Section 2.1(a), and such registrations have been declared
or ordered effective and the securities offered pursuant to
such registrations have been sold;
(C) If such request would require a registration within (i) 180
days from the effective date of a registration on Form S-1
pertaining to an IPO and (ii) 90 days from the effective date
of a registration on Form S-1 pertaining to an underwritten
offering of Registrable Securities;
(D) If the minimum estimated market value of any offering of
Registrable Securities pursuant to the provisions of this
Section 2.1 is less than $10,000,000; or
(E) If at the time of any Request For Registration, the Company is
engaged in, or has fixed plans to engage in within 30 days of
the time of the Request For Registration, a registered public
offering, or is engaged in some other activity which, in the
good faith determination of the Independent Directors, would
be adversely affected by the requested registration to the
material detriment of the Company, then the Company may at its
option direct that such Request For Registration be delayed
for a period not in excess of 60 days from the proposed
effective date of such registered public offering or, in the
case of such other activity, until such time as the
opportunity for material detriment shall have ended; provided,
however, that in no event shall any delay be longer than 90
days from the date of receipt of the Request For Registration,
such right to delay a Request For Registration to be exercised
by the Company not more than once in any 12 month period. The
Company shall give written notice of its determination to
postpone a Request For Registration to the Participating
Holders (provided, that the Company shall not be required to
disclose, in connection with its obligations under this
sentence, any information that could be deemed material
non-public information to any Participating Holders) and of
the fact that the reason for such
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postponement no longer exists, in each case, promptly after
the occurrence thereof.
(iii) Subject to the foregoing clauses (A) through (E), the Company shall
file a registration statement covering the Registrable Securities so
requested to be registered as soon as practicable after receipt of
the Request For Registration (but not more than 45 days after
receipt of the request for registration pursuant to the provisions
of this Section).
(iv) If as a result of a Demand Registration Cutback the Purchasers are
not allowed to include in any such registration at least 50% of
their Registrable Securities requested to be registered (whether or
not a Purchaser initiated such request), then such registration
shall not count as one of the Purchasers' three Requests For
Registration. If as a result of a Demand Registration Cutback the
Preference Holders are not allowed to include in any such
registration at least 50% of their Registrable Securities requested
to be registered (whether or not a Preference Holder initiated such
request), then such registration shall not count as one of the
Preference Holders' three Requests For Registration.
(b) Underwriting. At the request of the Initiating
Purchasers (with respect to a Request For Registration by the Initiating
Purchasers) or the Initiating Preference Holders (with respect to a Request For
Registration by the Initiating Preference Holders) the distribution of the
Registrable Securities covered by a Request For Registration shall be effected
by means of a firm commitment underwriting. The right of any Purchaser and
Preference Holder to registration pursuant to Section 2.1 shall be conditioned
upon such Person's participation in such underwriting and the inclusion of such
Person's Registrable Securities in the underwriting to the extent provided
herein. The Company, together with all Participating Holders proposing to
distribute their securities through such underwriting, shall enter into an
underwriting agreement in customary form with the managing underwriter(s)
selected for such underwriting by the Initiating Purchasers (in the case of a
Request For Registration by the Initiating Purchasers) or the Initiating
Preference Holders (in the case of a Request For Registration by the Initiating
Preference Holders) which underwriter(s) shall be reasonably acceptable to the
Company; provided, however, that no Participating Holder shall be required to
make any representations or warranties concerning the Company or its business,
properties, prospects, financial condition or related matters. Notwithstanding
any other provision of this Section 2.1, if the managing underwriter(s) advises
the Company and the Participating Holders in writing that because the number of
shares requested by the Participating Holders to be included in the registration
exceeds the number which can be sold in an orderly manner in such offering
within a price range acceptable to the Initiating Purchasers (in the case of a
Request For Registration by the Initiating Purchasers) or the Initiating
Preference Holders (in the case of a Request For Registration by the Initiating
Preference Holders) or that marketing factors require a limitation of the number
of shares to be underwritten on behalf of the Participating Holders (the "DEMAND
REGISTRATION CUTBACK"), then the Company shall include in such registration, to
the extent of the number which the Company is so advised by the managing
underwriter(s) can be sold in (or during the time of) such offering without such
interference or affect on the price or sale of, first, all Registrable
Securities requested to be included by the Participating Holders, pro rata with
respect to the number of Registrable Securities requested to be registered, and
second, the securities proposed to be sold by the Company for its own account.
If any Participating Holder disapproves of the terms of the
underwriting, such Person may elect to withdraw therefrom by written notice to
the Company (who shall thereafter
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promptly give notice to the other Participating Holders) and the managing
underwriter(s). The Registrable Securities so withdrawn shall also be withdrawn
from registration; provided, however, that, if by the withdrawal of such
Registrable Securities a greater number of Registrable Securities held by the
other holders of Registrable Securities participating in such registration may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to the Participating Holders the
right to include additional Registrable Securities in the same proportion used
in determining the underwriter limitation in the final sentence of the
immediately preceding paragraph.
2.2 Company Registration.
(a) Notice of Registration to the Stockholders. If at
any time or from time to time, the Company shall determine to register any of
its securities, either for its own account or the account of a security holder
or holders, other than a registration relating solely to employee benefit plans
or a registration relating solely to a Commission Rule 145 transaction, the
Company shall:
(i) Promptly give each Stockholder written notice thereof; and
(ii) Include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written
request or requests made within 45 days after receipt of such
written notice from the Company by any Stockholder, subject to the
Company Registration Cutback.
(b) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Stockholders as a part of the
written notice given pursuant to Section 2.2(a)(i). In such event the right of
any Stockholder to registration pursuant to the provisions of this Section 2.2
shall be conditioned upon such Stockholder's participation in such underwriting
and the inclusion of such Stockholder's Registrable Securities in the
underwriting to the extent provided herein. All Participating Holders proposing
to distribute their securities through such underwriting shall (together with
the Company) enter into an underwriting agreement in the form agreed to by the
Company and the managing underwriter selected for such underwriting by the
Company; provided, however, that no Participating Holder shall be required to
make any representations or warranties concerning the Company or its business,
properties, prospects, financial condition or related matters or provide for
indemnification or contribution obligations on the part of any Participating
Holder greater than the obligations set forth in Section 2.6 hereof.
Notwithstanding any other provision of this Section 2.2, if the managing
underwriter determines that the number of shares requested to be included in the
registration exceeds the number which can be sold in an orderly manner in such
offering within a price range acceptable to the Company or that marketing
factors require a limitation of the number of shares to be underwritten on
behalf of the Company (the "COMPANY REGISTRATION CUTBACK"), then the Company
shall include in such registration, to the extent of the number which the
Company is so advised can be sold in (or during the time of) such offering
without such effect on the price or sale, first, all securities of the Company
proposed to be sold by the Company for its own account, second, the Registrable
Securities requested by the Participating Holders, pro rata with respect to the
number of Registrable Securities requested to be registered and third,
securities of all other security holders participating in such registration pro
rata among such holders with respect to the number of securities sought to be
registered.
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2.3 Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Sections 2.1, 2.2 and 2.5, shall,
to the extent permitted by applicable law, be borne by the Company. All Selling
Expenses (other than the Selling Expenses to be paid by the Company in the
preceding sentence) relating to Registrable Securities registered by the
Participating Holders, as applicable, shall be borne by such seller(s) holding
such Registrable Securities pro rata on the basis of the number of shares so
registered. The obligation of the Company to bear the expenses described in
herein shall apply irrespective of whether a registration, once properly
demanded, if applicable, becomes effective, is withdrawn or suspended, is
converted to another form of registration and irrespective of when any of the
foregoing shall occur.
2.4 Registration Procedures. In the case of each registration
effected by the Company pursuant to this Agreement, the Company shall keep the
Participating Holders advised in writing as to the initiation, qualification,
compliance and completion of each registration. The Company shall use its
reasonable best efforts to expeditiously as possible:
(a) Keep each such registration, qualification or
compliance effective and current for a period of not less than 180 days in the
case of a registration pursuant to Section 2.1 or 2.5 (provided, that (i) such
180-day period shall be extended for a period of time equal to the period the
Participating Holders refrain from selling any securities included in such
registration at the request of an underwriter of Registrable Securities, which
period shall not exceed 90 days in the aggregate in any 12 month period, and
(ii) in the case of a registration of Registrable Securities on Form S-3
pursuant to Rule 415 of the Securities Act (i.e., a shelf registration) which is
intended to be offered on a continuous or delayed basis, such 180-day period
shall be extended, if necessary, to keep the registration statement effective
until the earlier of (i) all such Registrable Securities are sold and (ii) two
years from its effective date; provided, however, that Rule 415 of the
Securities Act permits an offering on a continuous or delayed basis) or such
shorter period to the extent all of the securities covered by such registration
statement have been sold and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the Participating Holders requesting registration pursuant to
Section 2.1 or 2.5, as applicable, set forth in such registration statement;
(b) Furnish such number of prospectuses, including
preliminary prospectuses, and other documents in conformity with the
requirements of the Securities Act as the Participating Holders from time to
time may reasonably request;
(c) Use its reasonable best efforts to register or
qualify the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as any Participating Holder
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Participating Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such Participating Holder;
(d) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each
Participating Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement; provided, however, that no
Participating Holder shall be required to make any representations or warranties
concerning the Company or its business, properties, prospects, financial
condition or related
11
matters or provide for indemnification or contribution obligations on the part
of such Participating Holder greater than the obligations set forth in Section
2.6 hereof;
(e) Notify in writing the Participating Holders at any
time when a prospectus relating to such registration statement is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing and of any
Commission stop orders or other material modifications in connection therewith.
In such case, the Company shall promptly prepare a supplement or amendment to
such prospectus and furnish the Participating Holders a reasonable number of
copies of such supplement to or amendment of such prospectus as may be necessary
so that, after delivery to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(f) Cause all such Registrable Securities covered by
such registration statement to be listed on each securities exchange on which
the same class of securities issued by the Company is then listed, if the
listing of such Registrable Securities is then permitted under the rules and
regulations of such exchange or if applicable, as a New York Stock Exchange
security or a NASDAQ National Market system security and, if requested by the
Participating Holders, cause all such Registrable Securities, if the Company's
securities are not already listed or traded, to be listed as a New York Stock
Exchange security or as a NASDAQ National Market system security;
(g) Provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) Enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Participating Holders or the underwriters, if any, reasonably request to
expedite or facilitate the disposition of such Registrable Securities (including
effecting a stock split or a combination of shares);
(i) Make available for inspection by the Participating
Holders, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any Participating Holder or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants to supply
all information reasonably requested by any Participating Holder, underwriter,
attorney, accountant or agent in connection with such registration statement;
(j) Otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least 12 months beginning with the first day
of the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) Permit any Participating Holder to participate in
the preparation of such registration or comparable statement and to require the
insertion therein of
12
material, furnished to the Company in writing, which in the reasonable judgment
of such Participating Holder and its counsel should be included;
(l) In the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in such registration
statement for sale in any jurisdiction, use its reasonable best efforts promptly
to obtain the withdrawal of such order;
(m) Use its reasonable best efforts to cause such
Registrable Securities to be registered with or approved by such other
Governmental Authorities as may be necessary to enable the sellers thereof to
consummate the disposition of such Registrable Securities;
(n) Cause to be delivered, (i) on the date the
registration statement with respect to such Registrable Securities becomes
effective (and, in the case of an underwritten offering, at the time of delivery
of any Registrable Securities to the underwriters to be sold pursuant thereto),
a letter dated such date, from the independent certified public accountants of
the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters and to any Participating Holder (that may be
deemed to be an underwriter) as the Participating Holder may reasonably request,
and (ii) to the underwriters and any Participating Holder that may be deemed to
be an underwriter opinions of counsel to the Company in customary form, dated
the date the Registrable Securities are delivered to the underwriters, covering
such matters as are customarily covered by opinions for an underwritten public
offering as the underwriters may reasonably request and addressed to the
underwriters and any Participating Holder (that may be deemed to be an
underwriter) as such Participating Holder may reasonably request;
(o) In the event of any underwritten public offering,
cooperate with the Participating Holders, the underwriters participating in the
offering and their counsel in any due diligence investigation reasonably
requested by the Participating Holders or the underwriters in connection
therewith, and participate, to the extent reasonably requested by the
underwriter for the offering or the Participating Holders, in efforts to sell
the Registrable Securities under the offering (including, without limitation,
participating in "roadshow" meetings with prospective investors) that would be
customary for underwritten primary offerings of a comparable amount of equity
securities by the Company;
(p) Cooperate, to the extent reasonably requested, with
each underwriter participating in the disposition of such Registrable Securities
and their respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers or the New York Stock
Exchange, as applicable; and
(q) Take all other steps reasonably necessary to effect
the registration of the Registrable Securities contemplated hereby.
2.5 Registration on Form S-3.
(a) In addition to the rights set forth in Sections 2.1
and 2.2, if a Purchaser or a Preference Holder requests that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) ("FORM
S-3") for a public offering of shares of
13
Registrable Securities, and the Company is a registrant entitled to use Form S-3
to register the Registrable Securities for such an offering, the Company shall
use its reasonable best efforts to cause such shares to be registered for the
offering as soon as practicable on Form S-3. The procedures and other
limitations for effecting the registration of the Registrable Securities on Form
S-3, including the procedure used for any underwriting limitation, shall be as
set forth in Section 2.1(b) above; provided, however, that (i) there shall not
be any limit on the number of registrations that may be requested by the
Participating Holders on Form S-3 and (ii) the Company shall be obligated to
effect a registration under this Section 2.5 only if the minimum estimated
dollar value of any offering of Registrable Securities pursuant to the
provisions of this Section 2.5 is at least $5,000,000. The Company agrees to
take such action, including the voluntary registration of its Common Stock under
Section 12 of the Exchange Act, as is necessary to enable the Stockholders to
utilize Form S-3 for the sale of its Registrable Securities, such action to be
taken as soon as practicable after the end of the fiscal year in which the first
registration statement filed by the Company for the offering of its securities
to the general public is declared effective.
(b) If the Company receives a registration request
pursuant to Section 2.5(a), the Company shall give written notice of such
request to all of the Stockholders (other than the Stockholder who has requested
a registration pursuant to Section 2.5(a)) as far in advance as practicable (but
not less than 15 Business Days) before the anticipated filing date of such Form
S-3, and such notice shall describe the proposed registration and offer such
Stockholders the opportunity to register the number of Registrable Securities as
each such Stockholder may request in writing to the Company, given within ten
Business Days after their receipt from the Company of written notice of such
registration. If requested by the Purchasers or the Preference Holders, in each
case, who has initiated the registration pursuant to Section 2.5(a), such
registration shall be pursuant to Rule 415 under the Securities Act. With
respect to registration pursuant to Section 2.5(a), the Company shall (i)
include in such offering the Registrable Securities of the Participating Holders
and (ii) use its reasonable best efforts to cause such registration pursuant to
the provisions of this Section 2.5(a) to become and remain effective as soon as
practicable, but in any event not later than 60 days after it receives a request
therefor.
2.6 Indemnification.
(a) The Company shall indemnify, to the fullest extent
permitted by law, each Participating Holder and each of its officers, directors,
general and limited partners, retired general and limited partners, managers,
retired managers, members, retired members, shareholders, agents and Affiliates
of, and holders of beneficial interests in, such Persons, and each Person
controlling any such Persons within the meaning of Section 15 of the Securities
Act, with respect to which any registration, qualification or compliance has
been effected pursuant to this Agreement, and each underwriter, if any, and each
Person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof), including any of the foregoing incurred in the
investigation or settlement of any litigation, commenced or threatened, arising
out of or based on (i) any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, (ii) any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, not misleading or (iii) any
violation by the Company of any rule or regulation promulgated under the
Securities Act or any state securities laws applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, qualification or compliance, and shall reimburse each such
14
Participating Holder and each of its officers, directors, general and limited
partners, retired general and limited partners, managers, retired managers,
members, retired members, shareholders, agents and Affiliates of, and holders of
beneficial interests in, such Persons, and each Person controlling any such
Persons, each such underwriter and each Person who controls any such
underwriter, for any legal or any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, however, that the Company shall not be
liable to any Participating Holder or underwriter in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by such Participating Holder or such underwriter and
stated to be specifically for use therein; provided, further, that the indemnity
agreement contained in this subsection 2.6(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing, with respect to an
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus or prospectus, the indemnification provided for herein
shall not apply to any loss, liability, claim, damage or expense to the extent
the same results from the sale of Registrable Securities to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the prospectus, or in the case of an untrue statement or
omission or alleged untrue statement or omission in the prospectus, a copy of
the amended prospectus or supplement thereto, if the Company shall have
previously furnished sufficient copies thereof, based upon the number of copies
requested by the Participating Holder, to the Participating Holder a reasonable
time in advance and the claim, loss, damage, liability or expense of such person
results from an untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in a preliminary prospectus or
prospectus that was corrected in the prospectus or amendment or supplement
thereto.
(b) Each Participating Holder shall, if Registrable
Securities held by such Participating Holder are included in the securities as
to which such registration is being effected, indemnify, to the fullest extent
permitted by law, the Company, each of its officers, directors, controlling
shareholders, agents and Affiliates of such Persons, each underwriter, if any,
of the Company's securities covered by such a registration statement, each
Person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on (i) any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other document
or (ii) any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse the Company, its officers, directors,
controlling shareholders, agents and Affiliates of such Persons, and each Person
controlling any such Persons, each such underwriter and each Person who controls
any such underwriter, for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Participating
Holder and stated to be specifically for use therein; provided, however, that
the obligation to indemnify shall be several, not joint and several, among such
Participating Holders and the liability of each such Participating Holder shall
be in proportion to and limited to the net amount received by such Participating
Holder from the sale of Registrable Securities pursuant to such registration
statement; provided, further, that the
15
indemnity agreement contained in this subsection 2.6(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of such Participating Holder,
which consent shall not be unreasonably withheld.
(c) Each party entitled to indemnification under this
Section 2.6 (an "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided, however, that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld). The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall bear the expense of such defense of the Indemnified Party if
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest (as determined in good faith by the
Indemnified Party). The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of any liability it may
have to an Indemnified Party (i) otherwise than under this Section 2.6 or (ii)
under this Section 2.6 except to the extent that the Indemnifying Party forfeits
substantive rights and defenses by reason of such failure. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to the entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
(d) The obligations of the Company and the Participating
Holders under this Section 2.6 shall survive the completion of any offering of
Registrable Securities under this Agreement or the termination of this
Agreement.
(e) An Indemnifying Party shall make payments within 30
days upon receiving written confirmation from the Indemnified Party of the
nature and amount of the expenses to be indemnified.
(f) Subject to the final sentence of this Section
2.6(f), if the indemnification provided for in this Section 2.6 is unavailable
or insufficient to hold harmless an Indemnified Party, then each Indemnifying
Party shall contribute to the amount paid or payable to such Indemnified Party
as a result of the losses, claims, damages or liabilities referred to in this
Section 2.6 an amount or additional amount, as the case may be, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party or parties on the one hand and the Indemnified Party or parties on the
other in connection with the statements or omissions which resulted in such
losses, claims, demands or liabilities as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or parties on the one hand or the
Indemnified Party or parties on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid to an Indemnified Party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this Section 2.6(f) shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any action or claim which is the subject of this
Section 2.6. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the
16
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Any contribution obligation shall
be several, not joint and several, among such Indemnifying Parties and the
liability of each such Indemnifying Party shall be in proportion to and limited
to the net amount received by such Indemnifying Party from the sale of
Registrable Securities pursuant to such registration statement.
(g) The indemnification provided for under this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Party or any officer, director or
controlling Person of such Indemnified Party and shall survive the Transfer of
securities.
2.7 Information by the Participating Holders. Each Participating
Holder including Registrable Securities in any registration shall furnish to the
Company such information regarding such Participating Holder and the
distribution proposed by such Participating Holder as the Company may reasonably
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
2.8 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of securities of the Company to the public without registration, after
such time as a public market exists for the Common Stock, the Company agrees to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date of the first registration statement under the
Securities Act filed by the Company for an offering of its securities to the
general public;
(b) Use its reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements); or
(c) So long as any Stockholder owns any Registrable
Securities, to furnish to such Stockholder forthwith upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), (ii) a copy of the
most recent annual or quarterly report of the Company and (iii) such other
reports and documents of the Company as a Stockholder may reasonably request in
availing itself of any rule or regulation of the Commission allowing it to sell
any such securities without registration.
2.9 Transfer of Registration Rights. The rights to cause the Company
to register securities granted to the Stockholders, as applicable, under this
Section 2 may be transferred or assigned to a transferee or assignee in
connection with the Transfer or assignment of any of the Registrable Securities
held by such Stockholder; provided, that (a) such Transfer or assignment may
otherwise be effected in accordance with applicable securities laws, (b) the
Company is given reasonably prompt written notice of such Transfer or assignment
(c) the transferee or assignee of such rights assumes in writing the obligations
of such Stockholder under this Section 2 and (d) the transferee or assignee (i)
receives at least 50,000 shares of Registrable Securities subject to adjustment
for share splits, share dividends or other similar changes in
17
capitalization or (ii) is a Family Member or a general partner, retired general
partner, limited partner, retired limited partner, manager, retired manager,
member, retired member, or an Affiliate of, or holder of beneficial interests
in, the transferor or assignor.
2.10 General. Except as otherwise set forth herein, in the event the
Company is obligated to effect a registration, the Company, the Purchasers and
the Preference Holders shall cause such meetings to be held, votes cast,
resolutions passed, by-laws enacted, documents executed and all acts and things
done to effect the public offering on customary and usual terms.
2.11 Other Registration Rights. The Company shall not grant to any
Person any registration rights, except with the written consent of holders of at
least 70% of the Registrable Securities held by the Stockholders, so long as any
of the registration rights under this Agreement remain in effect; provided,
however, that the Company may grant registration rights without such consent so
long as such rights could not result in a reduction in the number of securities
that the Stockholders (as the case may be) may include in any public offering
pursuant to this Agreement or otherwise adversely affect the rights of the
Stockholders (as the case may be) under this Agreement.
2.12 Mergers, Etc. The Company shall not, directly or indirectly,
enter into any merger, consolidation or reorganization in which the Company
shall not be the surviving corporation or shall become a subsidiary of a parent
corporation unless the proposed surviving corporation or such parent
corporation, as applicable, shall, prior to such merger, consolidation or
reorganization, agree in writing to assume the obligations of the Company under
Section 2 of this Agreement, and for that purpose references hereunder to
"REGISTRABLE SECURITIES" shall be deemed to be references to the securities
which the Stockholders would be entitled to receive in exchange for Registrable
Securities under any such merger, consolidation or reorganization.
2.13 Termination. The rights of each Stockholder and the obligations
of the Company pursuant to Sections 2.1, 2.2 and 2.5 shall terminate upon the
later of (i) May 8, 2013 and (ii) such time as such Stockholder is, in such
Stockholder's reasonable judgment, no longer an Affiliate of the Company and is
permitted to resell all Registrable Securities held by such Stockholder pursuant
to Rule 144(k) of the Securities Act, provided, that the Company shall continue
to be obligated to satisfy any and all of its obligations with respect to any
exercise of the rights of the Stockholders pursuant to such Sections prior to
such termination and the Stockholders shall be entitled to enforce any such
rights at any time.
SECTION 3
COVENANTS OF THE COMPANY AND THE PURCHASERS
3.1 Company Covenants.
(a) The Company shall pay the reasonable out-of-pocket
travel, lodging and other related expenses of all non-employee directors
incurred in connection with attendance at meetings of the Board or any committee
thereof.
(b) The Company shall at all times maintain a policy or
policies of insurance with reputable insurance companies providing the officers
and directors of the Company with coverage for losses from wrongful acts in such
amounts and on such terms approved by the Board.
18
(c) Subject to Section 3.3(d) hereof, the Company shall
use its reasonable best efforts to authorize or effect, or cause a Subsidiary to
authorize or effect, a rolling three-year strategic plan of the Company or such
Subsidiary (as applicable).
(d) Subject to Section 3.3(e) hereof, in the event the
Company fails to authorize or effect, or cause a Subsidiary to authorize or
effect, a rolling three-year strategic plan of the Company or such Subsidiary
pursuant to Section 3.3(d) hereof, the Company shall authorize or effect, or
cause a Subsidiary to authorize or effect, an annual operating plan and budget
for the Company or such Subsidiary (as applicable).
(e) The Company shall use reasonable best efforts to
nominate for election as a director at least one Novartis designee so long as
Novartis and its Affiliates own 19.4% or more of the Voting Stock and at least
two Novartis designees so long as Novartis and its Affiliates own 35% or more of
the Voting Stock (each such designee, a "Novartis Director").
(f) For so long as any Novartis Director is a member of
the Board, a Novartis Director shall be entitled to be a member of each Board
committee, whether such Board committee is existing as of the date of this
Agreement or is hereafter formed, so long as permitted under any applicable
securities laws or the rules and regulations of any exchange upon which the
Common Stock or other equity securities of the Company are listed (provided,
that in the event of any such limitation, Novartis shall be entitled to
designate one non-voting observer to each committee so affected).
(g) Subject to the provisions of this Section 3.1, in
the event that any Novartis Director designated hereunder for any reason ceases
to serve as a member of the Board or any committee thereof during such Novartis
Director's term of office, Novartis shall designate the Person to fill the
resulting vacancy on the Board or committee.
(h) If Novartis wishes to remove at any time and for any
reason (or no reason) any Novartis Director from the Board or a committee
thereof, then the Company shall take all necessary or desirable actions within
its control (including, without limitation, calling special board meetings or
stockholders' meetings) so as to remove such director and to replace such
director pursuant to this Section 3.1.
3.2 Purchaser Covenants. Each Purchaser shall be free to exercise
its rights to vote as a stockholder of the Company as it sees fit, except that
each Purchaser agrees to consent to and vote with respect to any consent or vote
required by the stockholders or Board of the Company (subject to any fiduciary
obligations that such directors may have under applicable law to stockholders,
constituents, debt holders or other stake holders, in each case, of the Company)
in favor of the following specifically enumerated matters:
(a) After both Contingent Payments have been made by
Novartis, an issuance of a number of shares of Common Stock equal to the product
of (x) the quotient obtained by dividing the number of shares of Voting Stock
outstanding prior to such issuance by 0.95 and (y) 0.05 in any 24 month period;
(b) An issuance of a number of shares of Common Stock
equal to the number of shares of Voting Stock outstanding prior to such issuance
multiplied by 0.05 in any 24 month period for use in licensing in or acquisition
of technology transactions, including without limitation, shares of Common Stock
issued pursuant to the License Agreement
19
between UAB Research Foundation and Novirio Pharmaceuticals, Ltd., dated as of
June 20 1998, as thereafter amended (any such shares issued, "IN-LICENSE
SHARES"); and
(c) The issuance of a number of Convertible Securities
(and subsequent issuance of Common Stock upon exercise or conversion thereof)
exercisable for shares of Common Stock and the issuance of Common Stock pursuant
to restricted stock awards or other stock-based awards, in each case pursuant to
stock compensation and equity incentive plans of the Company, in the aggregate,
equal to the number of shares of Voting Stock outstanding prior to such issuance
multiplied by 0.05 in any 18 month period.
Notwithstanding any other provision herein, (i) Purchaser's
obligations under clauses (a), (b) and (c) of this Section 3.2 shall be subject
to Purchaser's rights pursuant to Section 4 hereof to purchase New Shares and
(ii) each Purchaser will vote its Voting Stock in a manner to effect the rights
of the Preference Holders contained in Section 2.1.
3.3 Novartis' Approval Rights. Except as otherwise provided in this
Agreement or any of the other Ancillary Agreements, at any time that Novartis
and its Affiliates shall own at least 19.4% of the Voting Stock, the Company
shall not, without the written consent or vote of Novartis, take any of the
following actions:
(a) Authorize or increase, or permit any Subsidiary to
authorize or increase, the authorized number of shares of, or create or issue
additional shares of, or series of, any class or series of, the Company's or any
Subsidiary's authorized capital or options, warrants or other rights to acquire
any such authorized capital, other than with respect to the Company (i) as set
forth in Section 3.2 hereof, (ii) up to 1,976,588 shares of Common Stock issued
upon the exercise of granted options (whether vested or unvested) outstanding as
of May 8, 2003, (iii) shares of Common Stock issuable upon the conversion or
exchange of any Convertible Securities issued in accordance with this Section
3.3(a) (but only to the extent the issuance of such Convertible Securities were
treated as New Shares hereunder), (iv) shares of Common Stock, if any, issuable
upon exercise of the Series C Warrants and (v) any securities issued in
connection with any stock split, reverse stock split, stock dividend or
recapitalization of the Company which affects all holders of Common Stock
proportionally;
(b) Authorize or effect, or permit any Subsidiary to
authorize or effect, any change or modification to the structure or composition
of the Board or the governing body of such Subsidiary;
(c) Amend, modify or change, or permit any Subsidiary to
amend, modify or change, the certificate of incorporation or by-laws of the
Company or any Subsidiary or, in the case of a foreign Subsidiary, any other
similar organizational documents;
(d) Authorize or effect, or permit any Subsidiary to
authorize or effect, any rolling three-year strategic plan of the Company or
such Subsidiary; provided, however, that Novartis will not unreasonably withhold
approval of any three-year strategic plan that is consistent with the industry
practice of a pharmaceutical company at a substantially comparable stage of
maturity as the Company;
(e) Authorize or effect, or permit any Subsidiary to
authorize or effect, any annual operating plan and budget if there is no
approved strategic plan; provided, however, that Novartis will not unreasonably
withhold approval of any annual
20
operating plan and budget that is consistent with the industry practice of a
pharmaceutical company at a substantially comparable stage of maturity as the
Company;
(f) Authorize or effect, or permit any Subsidiary to
authorize or effect, any variance of total annual expenditure (capital or
expense) of more than 20% from the approved three-year strategic plan or annual
operating plan and budget, as applicable;
(g) Authorize or effect, or permit any Subsidiary to
authorize or effect, any decision that would result in a variance in excess of
$10,000,000 or 20% (whichever is greater) from the profit or loss target as
reflected in the approved strategic plans or annual operating plan and budget,
as applicable;
(h) Authorize or effect, or permit any Subsidiary to
authorize or effect, the acquisition (other than in the ordinary course of
business) in any manner, directly or indirectly, of the stock or any assets of
any Person by the Company or any Subsidiary which exceeds 10% of the net
revenue, net income or net assets of the Company and its Subsidiaries on a
consolidated basis;
(i) Authorize or effect, or permit any Subsidiary to
authorize or effect, the sale, lease, license, abandonment or other disposition
(other than in the ordinary course of business) of any assets or business of the
Company or any Subsidiary which exceeds 10% of the net revenue, net income or
net assets of the Company other than any sale, lease, license or other
disposition to a third party of the rights of the Company relating solely to an
HCV Product (as defined in the DLCA) meeting the following conditions: (x)
anywhere in the world, in the event Novartis has failed to exercise the Novartis
HCV Option (as defined in the DLCA) in accordance with Section 3.2(a) thereof,
provided, that the Company has provided the Commencement Notice (as defined in
the DLCA) in accordance with Section 3.2(a) thereof, (y) anywhere in the world,
in the event the DLCA has been terminated in its entirety (1) by Novartis
pursuant to Section 12.4 thereof prior to the payment by Novartis of a
Contingent Payment, or (2) by the Company pursuant to Section 12.3 thereof, or
(z) in such jurisdictions as to which the DLCA has been terminated, in the event
the DLCA has been terminated with respect to such HCV Product in such
jurisdictions (1) pursuant to Section 12.4 thereof prior to the payment by
Novartis of a Contingent Payment or (2) by the Company pursuant to Section 12.3
thereof;
(j) Incur, create, assume, become or be liable for, or
permit any Subsidiary to incur, create, assume, become or be liable for,
directly, indirectly or contingently, in any manner with respect to, or permit
to exist, any indebtedness or liability for borrowed money, including, without
limitation, indebtedness under guarantees, letters of credit or capital leases
or the like, in excess of $2,000,000 in the aggregate; provided, however, that
the Company shall be permitted to incur, create, assume, become or be liable for
such indebtedness if (i) the Company credit rating is BBB or better with
Standard & Poor's Rating Group (or the equivalent rating at Moody's Investor
Service, Inc. or other nationally recognized statistical rating organization) at
the time of such issuance and after giving effect thereto or (ii) the aggregate
amount of the Company's indebtedness after such issuance does not exceed 80% of
the aggregate amount of the Company's accounts receivable, inventory and net
property, plant and equipment as set forth on the most recent quarterly balance
sheet reviewed by the Board; provided, further, that no material term of any
such indebtedness shall be modified or amended in any material respect, nor
shall payment thereof be extended, without the written consent of Novartis if
any such modification or amendment would cause the Company not to be in
compliance with the foregoing;
21
(k) Authorize or effect, or permit any Subsidiary to
authorize or effect, any material change in the nature of the Company's or any
Subsidiary's business conducted on May 8, 2003 or enter into a new line of
business;
(l) Authorize or effect, or permit any Subsidiary to
authorize or effect, any Change in Control of the Company; and
(m) Authorize or effect, or permit any Subsidiary to
authorize or effect, the dissolution of the Company or any Subsidiary; adopt a
plan of liquidation of the Company or any Subsidiary; any action by the Company
or any Subsidiary to commence any case or other action under applicable
bankruptcy, insolvency, reorganization or liquidation laws as now or hereafter
in effect or any successor thereto, seek the appointment of a trustee,
custodian, receiver or similar official for the Company or any Subsidiary, or
make a general assignment for the benefit of creditors.
3.4 Standstill. Subject to the ability of the Purchasers and their
Affiliates to purchase Capital Stock of the Company pursuant to Section 4 of
this Agreement, unless approved or requested by a majority of the Independent
Directors, none of the Purchasers nor any of their Affiliates shall, directly or
indirectly, acquire, seek to acquire, propose to acquire, or influence members
of the Board or other stockholders of the Company to propose such Person's
direct or indirect acquisition or beneficial ownership of any additional shares
of Voting Stock or rights to acquire additional shares of Voting Stock,
including, without limitation, any Convertible Securities; provided, however,
that notwithstanding the provisions of this Section 3.4, if the number of shares
constituting Voting Stock is reduced or if the aggregate ownership of a
Purchaser and its Affiliates is increased as a result of a recapitalization of
the Company or as a result of any other action taken by the Company, neither
such Purchaser nor its Affiliates shall be required to dispose of any of its
holdings of Voting Stock even though such action may result in an increase in
the number of shares of Voting Stock owned by such Purchaser and its Affiliates.
The restrictions contained in this Section 3.4 shall terminate upon the earliest
to occur of: (i) the termination of this Agreement; (ii) the termination of the
DLCA in whole pursuant to Sections 12.3 and 12.4 thereof; provided, that such
termination was not a result of Novartis's material breach thereunder, (iii) the
mutual written agreement of Novartis and the Company, including a majority of
the Independent Directors; (iv) Purchasers and their Affiliates owning more than
90% of the Voting Stock; provided, however, that such Voting Stock was not
acquired in violation of the terms of this Agreement; (v) during any period of
two consecutive years, individuals who at the beginning of such period
constituted the Board (together with any new directors whose election by such
Board or whose nomination for election by the stockholders was approved by a
vote of a majority of the directors of the Company then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved by the directors then in office at the
beginning of such period, other than a director designated by a Person who has
entered into an agreement with the Company to effect a transaction described in
clauses (a), (b), (c) or (d) in the definition of Change in Control of the
Company) ceasing for any reason to constitute a majority of the Board then in
office (other than in connection with the transactions contemplated by the
Purchase Agreement and the Ancillary Agreements); (vi) receipt by the Company or
the Board of an unsolicited Acquisition Proposal or the public announcement by
an Offeror of an unsolicited Acquisition Proposal; (vii) the acquisition by an
Offeror of beneficial ownership of more than 20% of the voting power represented
by all Voting Stock (other than acquisitions by the Stockholders); or (viii) May
8, 2008. Nothing contained in this Section 3.4 shall prohibit Purchasers from
(i) seeking the approval of the Independent Directors for a waiver of the
prohibitions contained in this Section 3.4 for any acquisition of Voting Stock
or (ii) acquiring an amount of Voting Stock from holders
22
of Voting Stock (whether in open market transactions, private transactions or
otherwise) or the Company, from time to time, such that the amount of Voting
Stock to be acquired by such Purchaser plus the Voting Stock owned by Purchasers
and their Affiliates does not exceed 51% of the Fully Diluted Common Stock
Deemed Outstanding (which shall not include any Voting Stock owned by Novartis
BioVentures as of May 8, 2003 for purposes of this Section 3.4 only). The
parties hereto expressly acknowledge and agree that this Section 3.4 is not
violated as a result of the issuance of shares of Common Stock to Novartis
pursuant to the Concurrent Private Placement Stock Purchase Agreement dated as
of July 21, 2004, by and between Novartis and the Company, entered into pursuant
to Section 4.7(d) of the Stockholders' Agreement. The parties hereto further
expressly acknowledge and agree that the issuance of shares of Common Stock to
Novartis pursuant to the Par Value Stock Purchase Agreement, dated as of July
21, 2004, by and between the Company and Novartis is duly approved by a majority
of the Independent Directors (as defined in the Stockholders' Agreement) and is
not in violation of this Section 3.4.
SECTION 4
STOCK SUBSCRIPTION RIGHTS
4.1 Right to Purchase. The Company shall only issue New Shares in
accordance with the following terms:
(a) In the event the Company desires to issue any New
Shares (other than with respect to Convertible Securities or restricted stock
awards or other stock-based awards issued to any director, officer or employee
of, or consultant to, the Company pursuant to any compensation or equity
incentive plan, which shall be governed by Section 4.4 below), it shall first
deliver to Novartis a written notice (the "NOTICE OF PROPOSED ISSUANCE")
specifying the purpose of the issuance, the identity of the proposed purchaser
and the type and total number of such New Shares which the Company then desires
to issue (the "OFFERED NEW SHARES"), all of the terms, including the price, upon
which the Company proposes to issue the Offered New Shares, and stating that
Novartis shall have the right to purchase the Offered New Shares in the manner
specified in this Section 4.1 at the price and in accordance with the terms and
provisions specified in such Notice of Proposed Issuance.
(b) During the 45 consecutive day period commencing on
the date the Notice of Proposed Issuance is delivered to Novartis (the
"FORTY-FIVE DAY PERIOD"), Novartis shall have the option to purchase its pro
rata portion of the Offered New Shares (which shall be a fraction of the Offered
New Shares determined by dividing the number of shares of Voting Stock owned by
Novartis (which shall include the shares of Voting Stock owned by Affiliates
(other than Novartis BioVentures) in the case of Novartis) by the total number
of shares of Voting Stock outstanding (such pro rata portion of Offered New
Shares, the "PRO RATA NEW SHARES")) at the price and terms specified in the
Notice of Proposed Issuance; provided, however, that for purposes of this
Section 4.1(b) only, the number of shares of Voting Stock deemed to be owned by
Novartis and its Affiliates shall also include the number of (i) New Shares
accrued, and not yet offered in connection with Novartis's subscription rights
pursuant to Section 4.4 and (ii) if offered to Novartis, Offered New Shares for
which Novartis's option to purchase its Pro Rata New Shares has not expired or
been exercised pursuant to Section 4.4. If Novartis elects to purchase some or
all of the Pro Rata New Shares it must give written notice of its election to
the Company during such Forty-Five Day Period.
(c) If less than all of the New Shares have been
purchased by Novartis pursuant to paragraphs (a) - (b) hereof (such amount not
so purchased by Novartis,
23
the "UNSOLD NEW SHARES"), then the Company shall have the right until the
expiration of 90 consecutive days commencing on the first day immediately
following the expiration of the Forty-Five Day Period, to issue such Unsold New
Shares at not less than, and on terms no more favorable than those offered to
Novartis, the price and such other terms as are specified in the Notice of
Proposed Issuance. If for any reason such Unsold New Shares are not issued
within such period and at such price and on such terms, the right to issue in
accordance with the Notice of Proposed Issuance shall expire and the provisions
of this Agreement shall continue to be applicable to the Unsold New Shares.
(d) The Company shall set the time and date for the
closing of the purchase of the Pro Rata New Shares, which closing shall not be
more than 90 days after the first day immediately following the expiration of
the Forty-Five Day Period and which shall take place at the U.S. headquarters of
the Company.
4.2 Price. The purchase price for the Pro Rata New Shares shall be
paid on the date of closing in cash, by certified check or by wire transfer of
immediately available funds to a bank account designated in advance by the
Company.
4.3 Closing. At the closing, Novartis shall deliver the
consideration required by Section 4.2 above and the Company shall deliver
certificates representing the Pro Rata New Shares.
4.4 Securities Issued as Equity Incentives. The Company shall
deliver to Novartis a report within ten days after the end of each calendar
quarter notifying Novartis of the number of New Shares issued pursuant to
exercised Convertible Securities or issued as restricted stock awards or other
stock-based awards, in each case, to any director, officer or employee of, or
consultant to, the Company pursuant to stock compensation and equity incentive
plans of the Company (for which Novartis would have subscription rights) during
such calendar quarter. For purposes of Section 4.1 above, the date such report
is delivered to Novartis shall be deemed the Notice of Proposed Issuance and
Sections 4.1(b) and (d) shall apply; provided that, for this purpose, in lieu of
an option to purchase its pro rata portion of the Offered New Shares issued to
any director, officer, employee or consultant (all of such Offered New Shares
shall be issued to such director, officer, employee or consultant and not
Novartis), Novartis shall have the option to purchase from the Company such
number of shares of the type issued to the director, officer, employee or
consultant as is equal to the result obtained by dividing (a) the result
obtained by multiplying (i) the Novartis Percentage (as defined below) by (ii)
the number of Offered New Shares issued to the director, officer, employee or
consultant by (b) the result obtained by subtracting (i) the Novartis Percentage
from (ii) one, and such shares shall be deemed the "PRO RATA NEW SHARES."
"NOVARTIS PERCENTAGE" means the result obtained by dividing (a) the number of
shares of Voting Stock owned by Novartis (which shall include the shares of
Voting Stock owned by Affiliates (other than Novartis BioVentures)) immediately
prior to such issuance by (b) the total number of shares of Voting Stock
outstanding immediately prior to such issuance. Notwithstanding anything to the
contrary contained herein, Offered New Shares, Convertible Securities,
restricted stock awards or other stock-based awards issued to any director,
officer or employee of, or consultant to, the Company pursuant to stock
compensation and equity incentive plans of the Company which are issued without
a purchase price payable in cash by the recipient shall be offered to Novartis
at a purchase price equal to the par value of the shares pursuant to this
Section 4.4.
4.5 Novartis's Special Subscription Rights. (a) In connection
with any issuance of (i) In-License Shares or (ii) Common Stock upon the
exercise of the Series C
24
Warrant, Novartis shall have the right to subscribe for such number of
additional shares of Common Stock, at a purchase price per share equal to the
par value for such shares of Common Stock, as is equal to the result obtained by
dividing (x) the result obtained by multiplying (A) the Novartis Percentage by
(B) the number of shares of Common Stock issued pursuant to clause (i) or (ii)
above by (y) the result obtained by subtracting (A) the Novartis Percentage from
(B) one. The rights of Novartis pursuant to the provisions of this Section 4.5
shall terminate upon the earlier of (a) Novartis becoming obligated to make both
of the Contingent Payments and (b) Novartis and its Affiliates no longer owning
at least 19.4% of the Voting Stock.
(b) The rights of Novartis under this Section 4.5
shall not be transferable or assignable other than to an Affiliate of Novartis.
SECTION 5
MISCELLANEOUS
5.1 Survival. All covenants, agreements, representations and
warranties made herein or in any other document referred to herein or delivered
to any party pursuant hereto shall be deemed to have been relied on by each such
party, notwithstanding any investigation made by such party or on its behalf.
5.2 Amendments and Waivers.
(a) Without limitation to any other consent that may
be required pursuant to this Agreement, the rights and obligations of the
Company, the Purchasers and the Preference Holders under this Agreement may not
be waived (either generally or in a particular instance, either retroactively or
prospectively, and either for a specified period of time or indefinitely),
modified, supplemented or amended without the written consent of (a) the
Company, (b) the holders of a majority of the Voting Stock held by the
Purchasers and (c) holders of 66-2/3% of the Voting Stock held by the Preference
Holders (excluding Affiliates of Novartis); provided, however, that if any such
waiver, modification, supplement, amendment, consent or departure would
adversely affect the rights, preferences or privileges of any Preference Holder
disproportionately with respect to the rights, preferences and privileges of the
other Preference Holders, such Preference Holder's consent in writing shall be
required. Upon the effectuation of each such waiver, modification, supplement,
amendment, consent or departure, the Company shall promptly give written notice
thereof to the Purchasers and Preference Holders who have not previously
consented thereto in writing.
(b) Unless otherwise specified herein, any consent of
the Purchasers shall mean the consent of the holders of a majority of the Voting
Stock held by all of the Purchasers.
(c) Unless otherwise specified herein, any consent of
the Preference Holders shall mean the consent of the holders of a majority of
the Voting Stock held by all of the Preference Holders.
(d) From and after the date hereof until the earlier
to occur of (i) Novartis' failure to exercise the Novartis HCV Option in
accordance with Section 3.2(a) of the DLCA, (ii) immediately after the
termination of the DLCA in its entirety or with respect to the HCV Product
throughout the Territory (as defined in the DLCA) and (iii) payment of both
Contingent Payments, the Company shall promptly provide to each of the Initial
Sellers (as
25
defined in the Purchase Agreement), in writing, copies of any waiver,
modification, supplement, termination or amendment to the DLCA and/or the Supply
Agreement.
(e) To the extent not otherwise disclosed publicly,
from and after the date hereof the Initial Sellers hereby agree not to disclose
to any Person (other than their respective Affiliates, attorneys, accountants,
employees, officers, directors, members, retired members, managers, retired
managers, partners, retired partners and other representatives and beneficial
holders thereof who agree to maintain the confidentiality of such information)
the existence or terms of, or any information obtained in connection with, the
information delivered by the Company pursuant to Section 5.2(d) without the
prior written consent of Novartis, except (i) as may, in the reasonable opinion
of such party's counsel, be required by law or (ii) as may be required by any
Governmental Authority (in which events the disclosing party shall first consult
with the Company and Novartis with respect to such disclosure to the extent
permissible and practicable). If any Initial Seller is required to provide a
copy of any such information or any related document to any third party (other
than their respective Affiliates, attorneys, accountants, employees, officers,
directors, members, retired members, managers, retired managers, partners,
retired partners and other representatives and beneficial holders thereof), the
Initial Seller shall ensure that such document is redacted, in consultation with
the Company and Novartis, to the extent practicable and permitted by law, to
eliminate all confidential information. The Company and Novartis shall have the
right to review and approve each such document prior to its submission to any
such third party; provided however, that such approval shall not be unreasonably
withheld or delayed. A period of ten Business Days will be provided for such
review unless not permitted by law, in which case the maximum period allowable
shall be provided.
5.3 Successors and Assigns. Except as otherwise expressly provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors, assigns, heirs, executors and
administrators of the parties.
5.4 Entire Agreement. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous arrangements or understandings,
whether written or oral, with respect thereto; provided, however, that this
Agreement is not intended to supersede the Purchase Agreement or the other
Ancillary Agreements between the Company, Novartis and the other Persons named
therein.
5.5 Notices. All notices, requests, consents and other
communications hereunder to any party shall be given in writing or upon receipt
of a telecopy (with confirmation of such telecopy being received) and addressed
or telecopied to the party to be notified at the address or telecopier number
indicated for such party at the address or telecopier number, as the case may
be, set forth below or such other address or telecopier number, as the case may
be, as may hereafter be designated in writing by the addressees to the addressor
listing all parties and shall be deemed effectively given upon personal delivery
to the party to be notified or seven Business Days after being duly sent by
first class registered or certified mail, postage prepaid, or the following
Business Day after being sent by overnight courier or when receipt is
mechanically acknowledged, if telecopied:
26
To the Purchasers: Novartis Pharma AG
Lichtstrasse 35
CH-4002 Basel
Switzerland
Attention: Chief Executive Officer
Facsimile: 41-61-324-6677
With a copy (which shall not Novartis Pharma AG
constitute notice) to: Lichtstrasse 35
CH-4002 Basel
Switzerland
Attention: General Counsel
Facsimile: 41-61-324-6677
With a copy (which shall not Novartis Corporation
constitute notice) to: 608 Fifth Avenue
New York, New York 10020
Attention: General Counsel
Facsimile: (212) 830-2416
With a copy (which shall not Dewey Ballantine LLP
constitute notice) to: 1301 Avenue of the Americas
New York, New York 10019
Attention: Morton A. Pierce, Esq.
Facsimile: (212) 259-6333
To the Company: Idenix Pharmaceuticals, Inc.
60 Hampshire Street
Cambridge, Massachusetts 02139
Attention: Chief Executive Officer
Facsimile: (617) 995-9801
With a copy (which shall not Idenix Pharmaceuticals, Inc.
constitute notice) to: 60 Hampshire Street
Cambridge, Massachusetts 02139
Attention: General Counsel.
Facsimile: (617) 995-9801
With a copy (which shall not Wilmer Cutler Pickering Hale and Dorr LLP
constitute notice) to: 60 State Street
Boston, Massachusetts 02109
Attention: Susan W. Murley, Esq.
Facsimile: (617) 526-5000
To the Preference Holders: See Exhibit A attached hereto.
5.6 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law in any jurisdiction, such
provision shall be ineffective, as to such jurisdiction, and the balance of this
Agreement shall be interpreted as if such provision
27
were so excluded, without invalidating the remaining provisions of this
Agreement; provided, however, that any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
5.7 Counterparts. This Agreement may be executed in any number of
counterparts, and by the parties hereto in separate counterparts each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Any counterpart or other
signature hereupon delivered by facsimile shall be deemed for all purposes as
constituting good and valid execution and delivery of this Agreement by such
party. Stockholders may become parties hereto by execution and attachment hereto
of either an original or photocopy of the Stockholder Signature Page attached
hereto as Exhibit A.
5.8 Titles and Subtitles. The descriptive headings of sections and
paragraphs of this Agreement are used for convenience only and do not constitute
a part of, and are not to be considered in construing or interpreting, this
Agreement.
5.9 Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
5.10 Remedies. The parties hereto agree that irreparable harm would
occur in the event that any of the agreements and provisions in this Agreement
were not performed fully by the parties in accordance with their specific terms
or conditions or were otherwise breached, and that money damages are an
inadequate remedy for breach of this Agreement because of the difficulty of
ascertaining and quantifying the amount of damage that will be suffered by the
parties in the event that this Agreement is not performed in accordance with its
terms or conditions or is otherwise breached. It is accordingly hereby agreed
that the parties shall be entitled to an injunction or injunctions to restrain,
enjoin and prevent breaches of this Agreement by the other parties and to
enforce specifically such terms and provisions of this Agreement in any court of
the United States or any state having jurisdiction, such remedy being in
addition to and not in lieu of, any other rights and remedies to which the other
parties are entitled to at law or in equity. The rights, powers and remedies of
the parties under this Agreement are cumulative and not exclusive of any other
right, power or remedy which such parties may have under any other agreement or
law. No single or partial assertion or exercise of any right, power or remedy of
a party hereunder shall preclude any other or further assertion or exercise
thereof.
5.11 Expenses. Each party to this Agreement shall pay its own
costs, fees and expenses incidental to the preparation of this Agreement and the
consummation of the transactions contemplated hereby.
5.12 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any permit or consent of any kind or character on any parties part
of any breach, default or noncompliance under this Agreement or any waiver on
such party's part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing.
28
5.13 Amendment and Termination of Certain Provisions of the Prior
Purchase Agreement. The Preference Holders and Other Holders and the Company
hereby agree pursuant to Article XIII of the Prior Purchase Agreement that by
their execution of this Agreement, the Preference Holders and Other Holders
(which constitute Supermajority Purchasers (as defined therein)) and the Company
hereby provide their written consent to amend the Prior Purchase Agreement to
terminate Articles VII and VIII of the Prior Purchase Agreement, such amendment
to be effective on the Closing Date.
5.14 Governing Law and Consent to Jurisdiction.This Agreement shall
be governed by and construed under the laws of the State of Delaware (without
regard to the conflict of law principles thereof). Each of the parties
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
shall be brought and determined in the United States District Court for the
Southern District of New York or if such legal action or proceeding may not be
brought in such court for jurisdictional purposes, in the Supreme Court of New
York. Each of the parties hereby (x) irrevocably submits with regard to any such
action or proceeding to the exclusive personal jurisdiction of the aforesaid
courts in the event any dispute arises out of this Agreement or any transaction
contemplated hereby and waives the defense of sovereign immunity, (y) agrees
that it shall not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court or that such action is brought in
an inconvenient forum and (z) agrees that it shall not bring any action relating
to this Agreement or any transaction contemplated hereby in any court other than
any New York state or federal court sitting in New York, New York.
5.15 Further Assurances. Each party shall take such further actions
as may be reasonably necessary or reasonably requested by any other party in
order to effectuate the intent of this Agreement and to provide such other party
with the intended benefits of this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
29
This Stockholders' Agreement is hereby executed as of the date first
above written.
IDENIX PHARMACEUTICALS, INC.
By: /s/ Jean-Pierre Sommadossi
---------------------------------
Name: Jean-Pierre Sommadossi
Title: President and Chief
Executive Officer
[Stockholder Signature Pages Attached
Hereto]
30
EXHIBIT A
PURCHASERS:
Novartis Pharma AG
Lichtstrasse 35
CH-4002 Basel
Switzerland
Novartis BioVentures Ltd.
Lichtstrasse 35
CH-4002 Basel
Switzerland
PREFERENCE HOLDERS:
Adroit Private Equity (Offshore) Ltd.
P.O. Box 847 GT
Grand Cayman
Cayman Islands
Bank America Investment Corporation
c/o Bank of America Securities LLC
600 Montgomery Street
San Francisco, California 94111
BB BioVentures L.P.
111 Huntington Avenue, 31st Floor
Boston, Massachusetts 02199
Biomedical Sciences Investment Fund Pte Ltd.
250 North Bridge Road
27-04 Raffles City Tower
Singapore 179101
Carder, David
4208 Antietan Drive
Birmingham, Alabama 35213
Cloppenburg Automobil AG
12 Chamissostr.
40237 Dusseldorf
Germany
Cloppenburg Immobil AG
12 Chamissostr.
40237 Dusseldorf
Germany
31
Credit Suisse First Boston Equity Partners
(Bermuda), L.P.
11 Madison Avenue
New York, New York 10010
Credit Suisse First Boston Equity Partners, L.P.
11 Madison Avenue
New York, New York 10010
Credit Suisse First Boston U.S. Executive Advisors, L.P.
11 Madison Avenue
New York, New York 10010
EMA Partners Fund 2000, L.P.
11 Madison Avenue
New York, New York 10010
EMA Private Equity Fund 2000, L.P.
11 Madison Avenue
New York, New York 10010
Flammang, Robert
7 Rue Suffern-Reymond
Monaco 908000
Hanseatic Americas LDC
450 Park Avenue, Suite 2302
New York, New York 10022
KB Lux Venture Capital Fund-Biotechnology
43 Boulevard Royal
L-2955 Luxembourg R.C.
Luxembourg
Lucidi, Bruno
Avenue D'Orbaix, 9
1180 Bruxelles
Belgium
Merz, Peter
Bellerivestrasse 201
CH - 8034 Zurich
Switzerland
MPM Asset Management Investors 1998 LLC
111 Huntington Avenue, 31st Floor
Boston, Massachusetts 02199
32
MPM BioVentures Parallel Fund, L.P.
111 Huntington Avenue, 31st Floor
Boston, Massachusetts 02199
Murphy, Robert
2202 North Cleveland Street
Chicago, Illinois 60614
Nomura International plc
Nomura House
1 Street Martin's-le-Grand
London ECIA 4NP
United Kingdom
Schinazi, Raymond F.
2881 Peachtree Road, NE, Apt. 2704
Atlanta, Georgia 30305
Sommadossi, Jean-Pierre
125 Cambridge Park Drive
Cambridge, Massachusetts 02140
Swan Private Equity Verwaltungs GmbH
Hochstrasse 12
47877 Willich
Germany
TVM Medical Ventures Gmbh & Co. KG
Maximilianstr. 35C
80539 Munich
Germany
TVM V Life Science Ventures GmbH & Co. KG
Maximilianstr. 35C
80539 Munich
Germany
33
STOCKHOLDER SIGNATURE PAGE
The undersigned as an owner or holder of record of shares of Common Stock,
$0.001 par value per share, of Idenix Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), hereby joins in, becomes party to and agrees to be
bound by, the terms and conditions of that certain Amended and Restated
Stockholders' Agreement, dated as of July , 2004 (the "Agreement"), by and
among the Company and the stockholders named therein.
The undersigned hereby authorizes the Company to (i) complete this
Stockholder Signature Page by filling in the date of the Agreement and (ii)
attaching this Stockholder Signature Page (or a photocopy hereof, which shall be
valid for all purposes) to the Agreement, or counterparts thereof, as may be
applicable to the undersigned.
_________________________________________
Print name of Stockholder
_________________________________________
Signature if Stockholder is an individual
By: _____________________________________
Signature if Stockholder is an entity
Title: __________________________________
Print title of person signing if
Stockholder is an entity
34